Whistle

26 HR Magazine «April 2011

Cover Story

Whistle-Blowers:

Threat or

Asset?

Be prepared lest lawsuits proliferate.

By Dori Meinert

C

heryl Eckard repeatedly warned senior managers at GlaxoSmithKJinc that defective drugs were

being produced at its Puerto Rico plant. Rather than address the problems, they fired her

Eckard filed a whistle-blower suit. Last October, GlaxoSmithKline agreed to pay $750 million to settle criminal and civil complaints that the company knowingly sold contaminated drugs made

at the now-closed plant. Eckard received $96 million.

The number of whistle-blower suits—and the related payouts—have been growing in recent years

under federal and state laws aimed at uncovering fraud and protecting the public. Corporate lawyers

fear another surge of whistle-blower complaints will result from passage of the Dodd-Frank Act. The

The author is a senior writerfarHR Magazine.

April 2011 » H R Magazine 27

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law, which significantly increases

Steven J. Pearlman, a partner at

rewards and protection to those

Seyfarth Shaw LLP in Chicago, says

blowing the whistle on securities

he has been receiving calls from emviolations, affects publicly held

ployers that want to know how to

The share of workers who reported negative behavcompanies and their private subrespond to the proposed regulations.

ior rose to 63 percent in 2009, an increase from

sidiaries and affiliates.

Employers poured money and training

58 percent in 2 007, according to the Ethics

into complying with the federal SarThe U.S. Securities and ExResource Center's 2009 Natiotial Busitiess Ethics

banes-Oxley Act, enacted in 2002 in

change Commission (SEC) is

Survey report. Women are more likely to report

response to the Enron scandal, Pearlscheduled to release regulations

man says. Now, the SEC's proposed

implementing the law in April. Emwrongdoing than men. Managers are more likely

bounties pose a "risk of evisceratployers better get ready.

to...